by Donald Wood
Last updated: 11:40 AM ET, Wed January 29, 2025
Update: January 29, 2025, at 11:51 a.m. ET
Officials from Spirit Airlines announced on Wednesday that
the low-cost carrier rejected a merger bid from the Frontier Group.
According to Reuters.com,
Spirit revealed that Frontier offered shareholders $400 million in debt and a
19 percent stake in the airline earlier this month. In total, the deal would
have been worth an estimated $2.16 billion.
Spirit rejected the offer, saying it was “not-favorable,”
and expects to exit bankruptcy in the first quarter.
Original Text
Low-cost carrier Frontier Airlines announced on Wednesday
that it has once again proposed
merging with Spirit Airlines, which is currently in bankruptcy.
According to Frontier, the airline made a “compelling
proposal” to combine with Spirit through the issuance of newly issued “debt and
common stock.” Officials said the transaction would provide value to Spirit
financial stakeholders, in excess of the carrier’s current restructuring plan.
In 2022, Frontier announced a deal to merge with Spirit, but
JetBlue Airways made an offer that derailed the agreement. Unfortunately, a
federal judge blocked
the Spirit-JetBlue deal last year, leaving the discount carrier to file for
bankruptcy protection in November.
“This proposal reflects a compelling opportunity that will
result in more value than Spirit's standalone plan by creating a stronger low
fare airline with the long-term viability to compete more effectively and enter
new markets at scale,” Chair of Frontier's Board of Directors, Bill Franke,
said.
“We stand ready to continue discussions with Spirit and its
financial stakeholders and believe that we can promptly reach agreement on a
transaction,” Franke continued. “We are hopeful we can achieve a resolution
that delivers significant value for consumers, team members, communities,
partners, creditors and shareholders.”
Since submitting the proposal, Frontier has held discussions
with members of Spirit's board of directors and management team, as well as
representatives of the airline’s financial stakeholders, with respect to the
proposal.
As part of the discussions, Frontier shared materials
regarding the benefits of the proposed transaction with Spirit and its financial
stakeholders. Based on Spirit’s bankruptcy court filings, the materials also
demonstrate that Spirit’s standalone plan will likely result in an unprofitable
airline with a high debt load and limited likelihood of success.
"While we are pleased with the strong results Frontier
has been able to deliver through the execution of our business strategy, we
have long believed a combination with Spirit would allow us to unlock
additional value creation opportunities," said Barry Biffle, CEO of
Frontier. "As a combined airline, we would be positioned to offer more
options and deeper savings, as well as an enhanced travel experience with more
reliable service."
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